Canada Forced Uranium Cartel, Gulf Oil Insists

ByCarole Shifrin

December 9, 1977

Despite production of documents and testimony to a legislative hearing that suggest otherwise, Gulf Oil Corp. officials today stuck to their story that the Canadian government forced them into a worldwide uranium cartel.

Gulf officials began to participate in cartel meetings several months before Canadian government regulations were issued, the documents submitted to a joint hearing of the House Oversight and Investigations Subcommittee and the New York State Office of Legislative Oversight and Analysis indicate.

Although the Canadian government regulations governing the uranium industry within its borders were issued in late August 1972, memoranda introduced today indicate and testimony confirmed that Gulf officials had participated in a Canadian producers meeting in Paris in April of that year.

Roy D. Jackson Jr., a former Gulf attorney told the hearing today that he believed a formal decision was made in the Pittsburgh headquarters of Gulf during a series of meetings in which he participated in either late May or early June of 1972. "I state that categorically . . . " he testified.

Jackson is the author of a memorandum dated Sept. 8, 1972, which is often cited by Gulf officials as the document they rely upon when they insist that Gulf's participation did not violate United States antitrust laws.

The documents outlined the Gulf position that they were legally compelled by the Canadian government to join the cartel and that in any event, the cartel's activities would not effect U.S. markets for uranium. Jackson said the memo was "a composite result" of a team effort whose primary purpose was to document the fact upon which the earlier conclusion was reached.

The memo took note of the actions of the Canadian government in August, several months after Gulf officials had begun participating in cartel meetings.

One document placed on the public record at today's seven-hour hearing was written by F. R. O'Hara, associate general counsel of Gulf, dated July 29, 1972, summarizing a meeting of Gulf officials held the day before in Toronto. The memo explored in part whether immunity from prosecution of the antitrust laws was guaranteed 'by virture of the government of Canada requiring,' that all Canadian producers participate in the organization."

The memo also referred to three steps "which have been or are about to be taken" by the Canadian government to exert control over the uraninum market, which led some of the panel members at the hearing to suggest that Gulf officials had a hand in formulating the very directives on which they now rely. In another portion of the memo, O'Hara wrote that Bud Espey, a Canadian lawyer for Gulf, is said to have suggested that a certain degree of protection would be afforded Gulf if "there be nothing in writing."

"You wanted compulsion," Rep. Albert Gore, Jr. (D-Penn.) charged. "You wanted the Canadian government to require you to participate in order to provide a semblance of defense if you were later caught with your hand in the cookie jar . . . it's my belief that his compulsion is a sham."

Despite repeated prodding from Gore, who conducted the meeting, and other panel members, four current Gulf officials who testified today and claimed they had no recollection who might have made the decision to join the cartel.

"I do not recall being in a meeting when the decision was made," S.A. Zagnoli, executive vice president of Gulf Minerals Resource Company, claimed "My recollection is it envolved over a period of time . . . once the Canadian regulations were issued and we had a legal opinion, we just proceeded to operate under the Canadian regulations."

E.B. Walker, a top Gulf official who was in a position to make such a decision, claimed also that he didn't "remember ever making a decision" that Gulf would join the cartel.

"A violation of criminal law occured," Rep. Gore stormed, "and you're saying the corporation took this decision without anyone ever authorizing it . . . an act like that - joining a cartel that fixes prices, rigs bids, allocates markets, lies about it - would have required a decision within Gulf Oil Corp., wouldn't it?"

Walker replied: "The decision I guess was to say in business in Canada or get out." He said Gulf "got phased into the cartel." He said "somewhere" a decision was made that Gulf officials would go to meetings, but "I don't know where or by whom it was made."

Gore told the Gulf officials "I just don't believe you . . . I think one of you at this table made that decision."

The Gulf testimony was in contrast to the testimony of two Getty Oil Corp. officials who followed the advice of their lawyers not to join the Australian producers forum which was a part of the cartel, but the forum had rejected Getty's participation in the group on the grounds that its partner in a joint venture was already represented.